Saturday, 17 December 2016

Spinning the Scottish Budget

I haven't had time for more than a cursory look at this and am indebted to the ever-diligent Fraser Whyte for pointing out this latest example of presentational spin by the Scottish Government [you really should follow him: @FraserWhyte81].

There are some glaringly obvious questions about how this data is presented:

Why is 2010-11 there but not the other years prior to 2015-16?

Why are there no year-on-year percentage changes shown, only cumulative?

Why are 2010-11 and 2015-16 chosen as the base years for the cumulative percentages?

The accompanying text referring to "UK Austerity" states:

"The UK Government’s approach to public spending is having a significant detrimental effect in Scotland. Between 2010-11 and 2019-20, the Scottish Government’s Fiscal Departmental Expenditure Limit (DEL) from HM Treasury will fall by over nine per cent in real terms"

We can see the -9.2% in the last column of Table 1.02 above. This is clearly the number they want us to focus on, because one of Nicola Sturgeon's special advisors took to Twitter last night (of which more later) to drive the point home

First of all we have to understand the various different DEL (Departmental Expenditure Limits) figures quoted. I created the table below by just taking the key figures in table 1.01 above and showing how the various totals and sub-totals relate

The "Total Discretionary Spending Limits" row is what is used in table 1.02, where these figures are simply adjusted to real 2016-17 cash terms (i,e. adjusted for inflation). So when the budget text states "the Scottish Government’s Fiscal Departmental Expenditure Limit (DEL) from HM Treasury will fall by over nine per cent in real terms" they are referring to Total Discretionary Spending Limits, where these are defined as:

Total DELminus

Capital borrowing (i.e. devolved borrowing powers)minus

Net DEL adjustments (i.e. impact of devolved fiscal powers)minus

Financial transactions (i.e. effectively borrowing1)minus

Non-cash DEL (i.e. depreciation charges2)equals

Total Discretionary Spending Limits

So when the text refers to "Fiscal DEL from HM Treasury" they are not referring to either "Total DEL" or "DEL Settlement from HM Treasury".

When Sturgeon's SpAd referred to Discretionary Spending Limits as "DEL totals" in that tweet above, it was in direct response to this tweet highlighting the fact that "Total DEL" was not shown in real terms and there were no year-on-year percentages shown (both undeniably true).

It was late, maybe Colin was just tired - but you'd think if you're Sturgeon's SpAd you'd be careful not to wade in without understanding the figures or reading what was being said.

So now we know what we're looking at, how do we understand and interpret the trends? As Fraser Whyte quite reasonably pointed out on Twitter, it's kind of weird that there are only cumulative percentages and no year-on-year figures. Surely the Scottish Government isn't trying to avoid showing something that doesn't fit their preferred narrative?

Well let's see.

I went back to the 2015-16 Budget to be able to fill in the intervening years and put all figures in the same real 2016-17 terms as used in table 1.02. In doing so I recreated the percentages used in table 1.02, highlighted below in yellow.

If you're struggling to read that, here it is again just from 2014-15 which is really all we need to see

So what did the Scottish Government achieve by not showing 2014-15 as a relevant comparison year? Well firstly they avoided showing that Total Discretionary Spending Limit increased in real terms by 0.4% in 2015-16.

The table above also shows us that the Total DEL Settlement from HMT actually went up 1.7% in real terms in 2015-16 and our Total DEL went up by 2.7%. I can't think why they would have chosen to present the data in such a way as to avoid this being clear.

Note also that in 2017-18 our total DEL will increase by 1.1% in real terms and cumulatively from 2014-15 to 2019-20 will increase by 1.4% in real terms.

Look at the figures in green showing the year-on-year and cumulative from 2014-15 trend in Total DEL - tells quite a different story from the "over 9% real terms reduction" doesn't it?

The yellow highlighted figures presented by the Scottish Government are true - but they offer at best a partial and at worst a cynically skewed picture of how the capacity for Scottish Departmental Spending is impacted by the HM Treasury settlement.

Is it too much to ask that our Government stops treating us as fools and just presents a fuller, clearer picture?

1. Financial Transactions are allocated by HM Treasury to the Scottish Government and can only be used for the provision of loans or equity investment beyond the public sector. Financial Transactions facilities have to be repaid to HMT in future years.

2. depreciation or impairment costs associated with the ownership of assets. HM Treasury rules mean that this element of the overall DEL budget cannot be used to fund pay or procurement costs and as such this budget does not represent spending power for the Scottish Government.

6 comments:

It is a crime at common law for a public official, a person entrutsted with an official situation of trust, wilfully to neglect his duty, even where no question of danger to the public or to any person is involved." Gordon, Criminal Law, 3rd Ed. Vol. II Chapter 44. q.v.

On the other hand if one is not blinded by a burning wish to expose what isn't there in the first place, it might occur to one that when projecting figures for 3 years into the future, along with current year and previous year, against a baseline, it's usually a lot less confusing if you pick just 1 baseline year, than 5 baseline years.

A total of 6 columns to make a comparison, rather than 10 to make the eyes go fuzzy.

You pose three questions about the presentation of the Scottish budget1. Why is 2010-11 there but not the other years prior to 2015-16? Perhaps to show the real terms effects since the election of the Westminster Coalition government? That seems to me to be a reasonable base year, at least on a political justification. 2. Why are there no year-on-year percentage changes shown, only cumulative? There will be ups and downs. Indeed John McLaren showed prior to the 2014 referendum that the cuts that Scotland faced were to some extent back end weighted (ie for some inexplicable reason a disproportionate level of cuts only came after the referendum - strange that innit? See http://fiscalaffairsscotland.co.uk/wp-content/uploads/2014/11/Long-term-Scottish-budget-projections.pdf). But the fact is that none of them - apart from 10/11 - saw a change of government and thus potentially a change of policy. 3. Why are 2010-11 and 2015-16 chosen as the base years for the cumulative percentages? This is a bit naughty Kev, as you have already had a nibble at 10/11, but the answer is basically the same isnt it? in 10/11 the Tory/ Lib Dem coalition was in power and from 15/16 it has been the Conservatives. Generally speaking if you are looking for an explanation, then the obvious one is often best - certainly the one to start from. My own view is that the years when govt changed can be justified. Then again, of course if you are looking to be critical, then I suppose its different

@soccer docGood thorough answer. It could be summarised by one word: "Austerity". The layout is clearly to show the effect continuing Conservative austerity has on the declining funding for Scotland.

Why anyone would want to contradict or brush off the blatantly obvious reported by countless thinktanks I don't know, but the rest of the UK is suffering also from Osborne's doomed austerity policy and from the looks of it, worse than Scotland because of the prudent handling of finances by the Scottish Government.

For the sake of the rest of the UK, and Scotland while we're still in the UK, I hope Hammond has the sense to reverse austerity and invest far greater sums of money in capital spending over the next 3 or 4 years, because the UK as a whole is going to need a far bigger boost to ride out Brexit. The UK will badly need CPR in more ways than one, but the appropriate one in terms of spend is Country Process Reengineering.